Leaders of the New School
It's a tale that has become familiar. An entrepreneur starts a social media company at age 22, builds it up, and enjoys great success. But in this instance, the story is not about Mark Zuckerberg of Facebook or Naveen Selvadurai of Foursquare. It's about Samuel Feuer.
Never heard of him? Most people haven't. Feuer is the president and CEO of New York-based MindSmack (No. 114), a mobile app developer with a focus on geolocation. He founded the company 11 years ago, long before Facebook and MySpace and YouTube and Twitter, and guided it along as the concept of social media was created.
Though MindSmack has been around for awhile, the business really took off three years ago when the company got into app development; revenue grew by 2,214 percent between 2006, when sales stood at $123,800, to $2.9 million in 2009. The secret to the company's success, according to Feuer, is "insanely high standards including less than one minute to respond to customer service requests."
That is no doubt part of the equation; another part of it is that MindSmack and other companies like it are very good at finding the small opportunities created by big, game-changing technologies, and turning them into profitable businesses. The truth is that even as people make movies about Mark Zuckerberg and fawn over the Twitter guys, the future of social media is very much in the hands of entrepreneurs such as Feuer, who will take the major breakthroughs and move them forward in a million different incremental ways.
By the numbers: Three out of 4 Americans use social media technology.
For Denver-based EffectiveUI (No. 431), what started as a three-person software development shop in the basement of co-founder Anthony Franco's home, has grown in to a multi-million-dollar agency focused on user-centered research, design, and development. "We mostly work with senior-level executives focused on strategic customer experience initiatives," says CEO Rebecca Flavin, who now oversees a staff of 94.
Understanding the value of creating more meaningful online interactions, Flavin began focusing the company on learning how to refine an application's user experience. Early clients included Qwest Communications, which hired the company to create an online customer service portal, the Navy Federal Credit Union, which hired the company to build a mobile banking application.
As social media transformed the Web, EffectiveUI diversified, by expanding into related fields such as mobile application design. The business grew repidly: by 694 percent between 2006 and 2009, to revenue of $15.8 million. Keeping up with changing technology and client demands while continuing to build a healthy business has been difficult, and Flavin strives to maintain a fun atmosphere at the company. "It's challenging to grow as quickly as we have and still maintain the culture and passion that have been the foundation of the company, but we've managed to do it," she says.
By the numbers: Social media websites are more popular than e-mail.
The pressure is even more intense for Greg Tseng, age 30, who started a social media company with longtime friend Johann Schleier-Smith in 2004. To build a next-generation social networking site, the partners have raised $1.5 million in capital from angel investors and another $7 million through the Mayfield Fund.
Whereas social networks are used for staying in touch with people you already know, the site, Tagged (No. 476), is centered on fostering new relationships-or what Tseng calls social discovery. With degrees in physics and mathematics from Harvard University, the partners took an analytical approach to build their products and business. "We design sophisticated algorithms such as our 'people recommendation algorithm' that figures out which 80 out of 80 million to recommend to its users."
Today, the site's core audience consists of adults ages 18 to 44, who make up 85 percent of its 80 million members. Some four million new connections are formed across Tagged's social network each day. The company has been able to grow 632 percent from $3.1 million in 2006 to $22.7 million in 2009. The ultimate goal is to grow the user base to 200 million with revenue of $100 million.
Competing for engineering talent will be critical to the company's success. "We operate in Silicon Valley, which arguably has the toughest war for talent because the area is home to many other exciting and successful companies, some of whom are better known than Tagged," says Tseng.
By the numbers: Two-thirds of global Internet users frequently visit social media sites.
David Wachs, president of Chicago-based Cellit (No. 262), attributes his company's growth to the fact that "we've never been a one-trick pony. From the very beginning, we have always been diversified. Five-year-old Cellit provides tools that help companies like IKEA, Subway, and Ringling Brothers Barnum & Bailey Circus provide information and interact with their clients via mobile phones.
He got the idea for the business from his parents, who were real-estate agents. "My father came to me and suggested leveraging mobile technology to help provide information on properties," Wachs, 33, recalls. "From this idea came Cellit's first service."
Even with 1,187 percent growth over the past three years and 2009 revenues of $2.5 million, Wachs contends the sluggishness of the economy has had some impact on the upstart. "The main challenge we've faced is client hesitation, delayed decision-making and budget cuts," he says.
"Most businesses have never considered mobile marketing and thus have little to no budget assigned to it," says Wachs. But thanks to his company's platform's tracking systems, it's easy to demonstrate the ROI for clients. Plus, he says, "Mobile campaigns can be relatively cheap, and serve as a great way to help track and multiply the value of traditional advertising." Up next is enabling businesses to provide their customers with custom mobile solutions.
By the numbers: Time spent of social networks accounts for 10 percent of all Internet usage.
Being involved in the next big thing is old hat for Cary Rosenzweig, 50, CEO of IMVU (No. 456) in Palo Alto, California. IMVU was founded by a group of alumni from There.com, a virtual world founded by one of IMVU's founders. As Rosenzweig explains, "They left There.com, which was world-centric, to make IMVU, an online destination that was avatar-centric, because they learned that nobody wants to walk alone down an empty street whether in real life or a virtual one."
Building a virtual community and social entertainment network where members use 3D avatars to meet new people, chat, create and play with their friends seemed like a tall order, but the marketing got much easier with the release of James Cameron's Avatar.
IMVU achieved $22 million in revenue in 2009 and is on track to gross at least $40 million in 2010, with 85 percent of its revenue coming from paying customers and 15 percent coming from advertising. To date, the company boasts more than 50 million registered users and more than 10 million unique visitors per month. It's grown 657 percent over the last three years.
By the numbers: The use of social media sites is growing three times faster than the use of the Internet overall.
As for Samuel Feuer, the founder of MindSmack, he also has big ambitions. On a sunny day in July, the 33-year-old entrepreneur revealed his plans to me in the penthouse suite in midtown Manhattan that serves as his headquarters. Seven months ago, his company launched an app that helps users navigate indoors in shopping malls, airports, and on university campuses. To date, roughly 100,000 users have downloaded it, which Feuer expects that figure to grow to 1 million—"an incredible triumph," Feuer says.
That may seem like hyperbole, but it captures perfectly the mood of today's successful social media entrepreneurs—smart CEOs who are using existing technology to pursue small, profitable opportunities.